Trading position (short-term, our opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.

Crude oil extended its short-term downtrend this morning, as it got close to the July 20 local low of $65.01 again. The market declined overnight following the precious metals’ sell-off.

Friday’s Nonfarm Payrolls release was better than expected at +943,000, which led to the U.S. dollar’s advance. Consequently, commodities have sold off on Friday.

Oil at $65 Price Level – Will it Bounce Again?

The market reversed from the resistance level at around $74, broke the support level of $72, and then it further extended the decline. Today oil broke below its last week’s local lows, and this way it has retraced all of its late July gains.

(the graph includes today’s intraday data)

Medium-term Topping Pattern Still in Play

The market is trading below a month-long downward trend line. The medium-term resistance level remains at $77, marked by the early July high. The support level is at $65-66, marked by mid-July local lows, and the next support level is at around $62, marked by May lows, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Conclusion

Oil retraced all of its recent advances this morning, as it fell to the support level of $65 again. The market may be trading within a two-month-long medium-term topping pattern, and we may see an attempt at breaking below the support level. At this moment, no speculative positions are justified from the risk/reward point of view.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.

Thank you.

Paul Rejczak,

Oil Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care